ATO Interpretative Decision

ATO ID 2001/175 (Withdrawn)

Goods and Services Tax

GST and Drinking yoghurts
FOI status: may be released

The ATO view for this issue is covered in the 'GST food guide - Part 3 - Detailed food list'.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

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If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is the entity, a supplier of dairy products, making a GST-free supply under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when it supplies drinking yoghurt?

Decision

No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies drinking yoghurt. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts

The entity is a supplier of dairy products and supplies drinking yoghurt.

Drinking yoghurt is a drink that may contain real fruit.

Drinking yoghurt consists mostly of cultures.

Drinking yoghurt does not contain 95% milk, skim milk, buttermilk, or whey.

The entity is registered for goods and services tax (GST). The supply satisfies all the other positive limbs of section 9-5 of the GST Act.

Reasons For Decision

Section 38-2 of the GST Act states that a supply of food is GST-free provided that the supply does not come within any of the exclusions listed in section 38-3 of the GST Act.

The term 'food' is defined in section 38-4 of the GST Act to include: food for human consumption (whether or not requiring processing or treatment); ingredients for food for human consumption; or beverages for human consumption. In this case, drinking yoghurt is a beverage for human consumption.

In accordance with section 38-3 of the GST Act, some foods are not GST-free. This includes food or a combination of food specified in clause 1 of Schedule 1 of the GST Act (Schedule 1) and beverages other than those specified in clause 1 of Schedule 2 of the Act (Schedule 2). Therefore, consideration needs to be given as to whether drinking yoghurt is a beverage that is listed as GST-free in Schedule 2.

Drinking yoghurt will be GST-free if, according to item 2 of Schedule 2, the beverage consists of at least 95% milk, skim milk, buttermilk, casein whey, whey powder, or whey paste. This does not include flavoured versions of these items.

In this case, the drinking yoghurt consists mostly of cultures. It does not contain 95% milk, skim milk, buttermilk, or whey. Therefore, the supply of drinking yoghurt is not GST-free as it is not specifically listed in Schedule 2. It does not matter if the drinking yoghurt contains fruit or not.

The entity is registered for GST and the supply meets the positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, entity is making a taxable supply under section 9-5 of the GST Act

Date of decision: 21 February 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   Division 38
   section 38-2
   section 38-3
   section 38-4
   Division 40
   Schedule 1, clause 1
   Schedule 2, clause 1,item 2

Related ATO Interpretative Decisions
ATO ID 2001/176
ATO ID 2001/177

Keywords
Goods & services tax
GST food
Food for human consumption
GST beverages
Taxable supply

Business Line: GST

Date of publication: 10 August 2001

ISSN: 1445-2782

history

	Date:	Version:
	21 February 2001	Original statement
You are here	26 August 2005	Archived

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